After the Revolutionary War, the U.S. monetary system was based on gold. Historically, why did the U.S. adopt the use of gold as a currency? How does this compare with the currency used today?
What will be an ideal response?
Historically, the U.S. adopted the use of gold as a currency (or as a way to back paper notes) because people had grown suspicious of the use of fiat money. During the Revolutionary War, the Continental Congress issued continentals that became worthless with rising inflation. Using gold to back currency gave the public trust in the government's ability and desire to protect its value (e.g., to prevent rising inflation). Today, the currency printed by the U.S. Treasury Bureau of Engraving and Printing is fiat money. That is, it has little or no intrinsic value. The general public is willing to use this fiat money because it trusts the government's promise to protect its value. People have an expectation that they will be able to use the existing currency to pay for goods and services.
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Explanations for the high saving rate in China consistent with the life-cycle reason for saving include:
A. few opportunities to borrow funds for education or paying for a house. B. the desire to leave resources to children who provide support and attention to parents in their old age. C. China's limited social safety net provides most people with little protection against health problems and medical costs. D. low unemployment rates in China.
In the above figure, the efficient level of chemicals produced per week is
A) 0 tons. B) 4 tons. C) between 5 and 7 tons. D) 8 tons.
With time, which one of the following strategies would most likely result in an outward shift in the production possibilities curve of an economy?
a. passage of legislation reducing the workweek to 30 hours b. instituting a tax policy encouraging consumption at the expense of investment c. instituting a tax policy encouraging investment at the expense of consumption d. an increase in the marginal income tax rate, which would reduce the work effort of individuals
Joe is self-employed in a store that has a rental value of $500 a month which he pays, but he can vacate the building without giving notice. His other expenses are $100 a month for maintenance. He makes $25,000 a year on net sales (total revenue minus the wholesale cost of the product). If he quit his job and worked the same number of hours elsewhere at a job he liked equally well, he estimates that he could make $20,000 a year. No one else can be hired to work in the store. Suppose that Joe had a long term lease which requires him to pay the rent even if he doesn't operate the store. What should Joe do?
A. Keep the job permanently. B. Keep the job until the lease expires. C. Quit immediately. D. It is impossible to say with the information given in the problem.